The Case for Public Option

At its core, a health care overhaul must ensure that every American has access to affordable medical care. The most promising way to do this is to include a mandate for coverage and a public insurance component in any new plan.

Progress, it appears, is being made. Sen. Olympia Snowe, a member of the Senate Finance Committee, which is writing what many consider the most viable reform bill, several weeks ago called a public option a “last resort.” This week, she said it was a “standby.”

In an interview with the Associated Press, the senator said a public option could bridge the partisan gap that threatens to derail health care reform efforts. However, her notion that including the public option from day one would be unfair to private insurers missed the point, a point she made herself later in the interview.

“I don’t think we can entirely depend on the private insurance market to deliver,” she told the AP. “They haven’t delivered thus far and that’s why we’re in the predicament we’re in.”

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That’s why a public option is needed.

Sen. Snowe said she believes her committee can produce a bipartisan bill, but that “everybody has to give a little.”

Those who should give the most are the lawmakers and lobbyists defending the status quo, which unduly burdens employers and diverts too much money to insurance companies.

“The fact remains that there is little economic logic in forcing companies to provide health insurance,” business owner Jonathan Weber wrote this week for The Big Money, an economics Web site.

“It distracts from their principal mission, it gives large companies a big advantage over small companies (big companies can leverage economies of scale to reduce their per-employee costs), and it introduces friction in the job market by creating an external incentive not to change jobs,” wrote Mr. Weber, the founder and CEO of New West, a media company in Missoula, Mont.

The National Federation of Independent Business warns: “It’s just too easy to imagine we’d end up with a health care system run with the efficiency of the Post Office and the compassion of the IRS, at Pentagon prices.”

Mr. Weber dryly observes this pretty much describes the current private health insurance system. While he notes he’s no fan of government mandates, he’d be willing to pay 8 percent of his payroll to the federal government and get himself out of the business of providing health insurance.

No doubt thousands of businesses across the country agree. Exempting small businesses from mandated coverage would leave a big hole in the program. Giving them credits and access to a government-run plan is a better path toward universal coverage.

Requiring businesses to contribute for all employees they don’t cover on their own rather than just for low-income workers, which is currently in the Senate Finance Committee bill, is also important so as not to dissuade companies from hiring low-income workers.

Freeing companies to focus on their core business rather than negotiating and managing insurance coverage is good for employers and workers. Having a public option, to ensure real competition, makes it even better.